WHAT CHANGES WILL BREXIT PRODUCE ON GB'S ECONOMY?

28.02.2016 23:46

Since David Cameron promised to his electors that he would set out a referendum referring to the Brexit issue, the conservative vote intention rose incredibly rapidly. And now, the moment has arrived. It is not yet 2017, as the electoral program said, but the 23 of June, the British will affront one of the most important decisions of their life: Will Britain remain as a member of the European Union? If Britain finally exits the EU, there will be several consequences, but here we will just look at the economic side, finding out what will happen in themes as immigration, trade, or international investment, as a result of the referendum; having a great impact on jobs and the stock exchange, due to the economic uncertainty that will be generated.

The first section of the economy affected by Brexit will be trade, some Euroesceptics even think that leaving the EU will free GB from its rules and make Britain a more independent trading nation, but they are not totally correct, not even close. Leaving the EU for Britain will mean in reality that the most important market where it is now present (EU), will close its doors to British trade, and all the markets around the world are interested to have agreements and treaties with the EU for its stability, and not with Britain alone, as it will show uncertainty. If GB leaves the EU, the will lay out of very important international pacts, as the TTIP, which is only between the USA and the EU; but it is fair to say that this will also depend on the economic strength of Britain in the short term and its negotiation abilities. In a recently done research, we can observe than more of 55% of the English commerce would vote against Brexit the next 23 of June, are very confident that the EU brings monetary protection and stability to its member countries.

HERE WE CAN OBSERVE A CHART STIMATING EXPORTS A IMPORTS IN BRITAIN DUE TO THE EU:

Doing a research about this theme, we can find some more statistics that demonstrate the fact the British exports will decrease after Brexit. We find a clear example in a research done by the National Statistics Agency, that shows that British exports have risen more than a 15% since it belongs to the EU, as the majority of the exported products are destined to countries as the USA, Germany, France or the Netherlands, and expanding the market right now towards China, thanks to the trading conditions and benefits of the EU. The most affected areas by the Brexit will be clearly the tertiary sector, and into it, IT services, or accounting, as the percentage of services offered of this type in the USA are 40% from the EU. This shows that belonging to the EU increases the countries chance of securing free trade with other interested nations. The structures as the G8 or G20 were created in purpose of increasing trading and foreign investment, and increase economic relations. This was shown in 2015, because nearly 12% of the GDP of GB was due to demand of member countries of the EU.

One of the most important factors that will be affected through this decision, will be labor. The leader of the Liberal Democrat party in Britain, has advised this week that nearly 3m jobs depend on staying in the EU. It is clear that the European Union protects employment in a direct way, as it gives access to a market with more than 500 million demanders, and Britain is one of the member countries that more direct investments attracts, due to its low taxing, and the facilities to set up a company or "start-up". Many important firms as Nestlé, Hyundai or Goldman Sachs have declared this week that they would take their companies out of Britain in case of Brexit, as the wont' bet against economic risk. The two sectors that will be affected at most by Brexit will be the car industry and the financial sector, as they are the ones that rely the most on foreign money. The car industry moves in Britain more than the 3% of the GDP as circulating capital, generating 700,000 employs. The financial sector is also one of the main characters in the British economy, generating 11bn a year, and having nearly 15% of the total investments, located in GB. Finance services in Britain employ 155,000 people, as more than 250 investment banks intervene in the British financial market.

In conclusion, we can observe that an exit from the EU will affect Britain negatively, as within a very big range of variables, all the treaties of the EU allowing free trade with other markets will leave Britain out, being enable to negotiate by its own with the principal economic powers of the world, as the USA or China. The economy will be affected almost all by a reduction of trade, by a descend of consumers, creating excess supply of services in many markets, and also by reducing direct foreign investment, as the offered benefits will be smaller, and the difficulties higher, making those investors put their money into liberal European economies, such as Ireland or Germany. Leaving the EU will be a very significant lose for the UK, as we can see by a research of the LSE, the GDP will fall directly by a 2.25% in the first two years, and nearly 9,5% in the next decade, creating a result in the long term similar to the world financial crisis of 2008. By our own we are strong, but united, we are unbeatable!